The company is up to some interesting tricks, however. Two days before its 3rd quarter began, the company announced that it may buy back up to 5% of its common stock in the coming year. But this appeared to be nothing more than a public relations move: in the third quarter, the company ended up buying back just 22,000 shares. At the same time, it issued 987,668 options to executives and directors!
Issuing options is nothing new of course, but what is worrisome is that the company only has 13.6 million shares outstanding, yet in a single quarter it issued 7% of that number in stock options! Equally worrisome is how the company talks up its buybacks in the headlines, while quietly issuing this egregious number of options in the background. The company used this line in its top paragraph on "business priorities" to talk up its paltry purchase of 22,000 shares, while it made no effort to explain the unusually large issuance of options:
"At September 30, 2009 the Company had repurchased 22,000 shares at an average price of $ 2.18 per share for a total of $ 48,000. The Board of directors of Hartco considers that the [buyback] is an appropriate use of financial resources and will be beneficial to Hartco."
Management will often headline the items that are likely to appease shareholders. However, the onus is on investors to dig deeper in order to figure out what the company is really up to.